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Sep 27 Q & A: Hawke Media's Erik Huberman

Erik Huberman is the founder and CEO of Hawke Media, one of the fastest growing marketing agency in the country. Launched in 2014, Hawke Media has been valued at $75 million and has grown from seven to over 130 employees. The company has serviced over 1000 brands of all sizes, ranging from startups like Tamara Mellon, SiO Beauty and Bottlekeeper to household names like Red Bull, Verizon Wireless and Alibaba. Hawke Media has taken home numerous industry awards including inclusion on the Inc. 5000 2017 list of “Fastest Growing Companies,” Fortune Magazine’s “50 Best Workplaces in Southern California” and Forbes’ “Content Marketing Companies to Check Out in 2018.”

For this installment of Dartmouth Business Review’s “How I Built This” series, we sat down with Hawke’s Erik Huberman to uncover the secrets behind Silicon Beach’s hottest startup.

DBR: Why Hawke? What problem did you see that needed to be solved?

Huberman: After having built three e-commerce companies and selling two, I was working on my next project: A tea company. In the meantime, I didn’t want to burn through cash, so I decided to do some consulting on the side. As I started doing it more and more, I learned a few things: 1) There’s money in consulting 2) Having an insider’s perspective allowed me to realize how many mistakes were being made with all these other companies.

The problem that I kept running into was that when it came time to execute on the things that I was advising on, it was hard because you either hire a team in-house to do your marketing or you hire an agency. What I found was that in-house isn’t very cost effective (that’s assuming you can attract and retain the right talent.) On top of that, you end up stuck in an information funnel. The few marketing agencies that are any good tend to be very expensive, they want long-term contracts or have some other barrier they put up that makes them hard to work with.

So that was the opportunity: Frustration with the ecosystem and the fact that it was very hard for a new company stepping into this space to get good talent to work with them. I figured I could attract great talent because I lived in Santa Monica and already had a strong network, so I started with an arm’s reach network and put them together each to their own expertise, eventually gaining access to all these companies.

Let’s take a journey to the early days of Hawke. How did you go from idea to execution?

It’s about checking one box at a time and doing it quickly

It’s about checking one box at a time and doing it quickly. Everyday you’re going to have to face a new problem. Once you solve one problem you’re going to have five more open up and it’s about just solving those. I started out as a consultant by myself and over time hired people that fit the things I needed help with, and the ideas was: “If I can’t afford to hire somebody for that, I’m either not charging enough or it’s not that valuable.” This quickly showed me what to focus on, where to hire, and how to identify opportunities for growth.

In the early days, I’d go out there and find new clients and do marketing sales by myself. Fortunately, I seemed to have a knack for marketing and really did an effective job at landing those first contracts.

Operationally, it was more like, “There’s more work than one person can handle, let’s go out there and hire a second person.” And when hiring became a challenge, because of the amount of hiring that we do, it was like, “Well, let’s hire a recruiting agency and figure out a strategy around hiring.” It’s simply about reacting to problems as they come up. This year, it was me and my partner trying to manage a hundred and fifty people. This wasn’t sustainable, so we hired a nine-person executive team to make our lives easier. Then, it was a growth problem, and we fixed that by figuring out how to scale size marketing. Who knows what the next challenge is going to be?

Recent years have witnessed a strong interest in venture capital. To what do you attribute this demand and where does Hawke stand in terms of adopting venture capital?

Let me start off by saying there are a lot of benefits to VC funding. Hawke actually has a venture capital fund and we’ve invested in twelve very successful companies. Venture capital is not for everyone, however, and entrepreneurs should take heed of its dangers.

Often times, when you raise early, it’s because you don’t have the inherent core competencies and skill sets to develop the business you are trying to build, and that can be fatal to some businesses, because the moment that you make a misstep, suddenly you’re fixing all your problems with money and that’s a very risky proposition.

Growth capital can be very interesting once you have a methodology and a recipe to grow your company. It’s great if you want to accelerate, but sometimes a company can grow too fast and that can also be a problem. There’s a lot of companies out there that have raised to the point where they are worth billions of dollars but they only should have been worth two hundred million and it’s fine that they would have been a two hundred million company, but now they have to pay back a billion dollars’ worth of financing, so you end up with a lot of problems and a lot of stress.

We have looked at raising for Hawke a few times and every time it’s caused more stress than it’s worth. Despite refusing VC money, we have grown at a rate that’s pretty remarkable. Last year, we were the 5th fastest growing company in Los Angeles, and we’re currently the 110th fastest growing company in the country. Even better, we have no debt. I think that’s been a key part of our success.

A recent study conducted at Dartmouth reveals trust is the number one factor influencing consumer decision making. How does Hawke earn the trust of consumers?

Credibility is a big deal in the marketing industry. When I first started Hawke, people asked me, “Why should I trust you with my marketing?” Luckily, I had built and sold two very successful companies, so I’d already done what they wanted me to do. You can’t get any more credible than that. If you want to win the Super Bowl, just hire a bunch of guys who have been there before. It’s that simple.

As we went on, it was more case studies and proof in the pudding kind of scenarios. Among the majority of new companies, credibility and trust comes from third party validation. People tell themselves, “I’m not going to trust you inherently, but who do I trust that will recommend you so that I can feel better about you?” Depending on the product or service, that’s way more or less important. For example, if you’re dealing with a baby product, it’s very important because somebody isn’t going to buy something just because they see a Facebook ad for it, but if it’s a shoe brand, it can be a very different story.

Problems never really go away, they just change

Generally speaking, word-of-mouth is going to be the biggest driver of any business.

People are going to buy things more often because their friends tell them to. That being said, to get to those initial early adopters, you need a marketer to get the word out there. Otherwise, no one will find out about your great product or service. At Hawke, we care about identifying those individuals. Later on, it’s about staying relevant and really nurturing those relationships. When you talk about blue-chip brands like Coca-Cola or Microsoft, everyone knows who they are. Their job now is to stay relevant and stay in front of those people to get them to purchase.

In discussing Hawke, you have described it as “the McKinsey of digital marketing.” How is this analogy relevant?

At Hawke, we think of ourselves as a marketing consultancy not as a marketing agency. Agencies go in, come up with a creative campaign and run with it. They don’t take the time to figure out the business fundamentals or how marketing affects the long-term mission of an organization. A consultancy goes a little deeper, which is why we have the tagline Your Outsourced CMO. We put a CMO person on the accounts that we work on so that they can have that senior perspective, not just a superficial look. Let’s suppose you get a 200% return on ads spent. What are the margins of the company? Does that actually make sense? What is the long-term-value of that customer? Is it paying off or vice-versa? Now, let’s assume we are only getting a 50% on ads spent. Are those people coming back regularly? What does that look like long term? It’s about identifying the core of the problem. We are the Bain of marketing. We are coming in strategically and then triaging where the issues are for a business.

Let’s talk innovation. What’s Hawke IQ about and what trends do you see in marketing consultancy?

So, I met a met a brilliant guy who ran innovation for Deloitte and then was the CEO of X Prize, which is a pretty awesome non-profit that created the first private space flight, so it’s a pretty amazing company and when I was meeting with him he asked me, “Well, what’s going to be the Uber to your taxi company? What’s going to disrupt you? And if you know, then why aren’t you building it?” What we came up with are two key pieces that are going to disrupt us, one is the distributor workforce with freelancers around the world due to geographic limits going away and the other is artificial intelligence.

So, we’re working on both projects. In terms of the distributor workforce, we’re building an easy way to very lightly do what Hawke Media does. So that was one solution. And then the other was, well, if AI is going to be a big part of what we’re doing, then we are going to build a repository pulling in thousands of companies’ data in real time and we are going to build layers on top of it with visualization so that we can take actionable from that data. The next step is going to be computers actually making those changes. Let’s assume you have a bad conversion rate: Is it your site speed? Is it your funnel is it your product? Identify the problem and if you can fix it from a digital perspective, then fix it. It’s a very long-term play, but that’s one thing we are working on.

Any words of advice for aspiring entrepreneurs?

The thing that I see separates people who end up successful and not is whether they can roll up their sleeves and get to it and keep at it.

I’m not saying to run down a path of failure forever, but what I see is that a lot of people talk a lot, a lot of people say, “I’m working on this, I’m working on that,” but that doesn’t mean anything. Even on my own company, I just mentioned I’m working on these two expansions at Hawke but what we actually did is we hired a data scientist, we hired an engineer, we’re building a platform on the self-serve side and there’s someone working full-time on building that platform, It’s about doing it, not just sitting around, debating it and then when you end against obstacles, because everybody does, solving them and moving forward.

At Hawke we have a saying, “Get Shit Done”

A lot of people end up against an obstacle and sort of mess around with it and don’t get it done. My partner has this great speech which he gives to new employees. He holds this wheeling chair in front of them and puts his hands on them and goes, “I’m thinking about moving the chair, I’m planning on moving the chair, I’m working on moving the chair, we’ve met three times about moving the chair and we think the chair should move,” he says all these things over and over again and then goes, (pushes the chair) “This is moving the chair!” That’s getting it done. You can plan it or you can do it.

For entrepreneurs who get into starting a business because it’s the sexy thing to do, actually get to work and know that you don’t get to check out, you take on the burden with entrepreneurship. Fewer than 1/12 businesses succeed and out of that 1/20 make it to a million in revenue. If you’re going to go out there just know that the odds of success are massively low and that it is a rollercoaster. There’s a problem every day and know that running a business whether you are the founder or a CEO, is problem solving, putting out fires all day, every day.

Don’t get me wrong, I do it for a reason, the ups are worth the downs, the successes are worth the failures, the pain is worth it but it’s not a walk in the park. If it’s something that you really want to do, just get ready for the rollercoaster and get shit done. It’s on you. The only times that I’ve had problems in my business are when I think that someone else is going to solve it. No one else is going to do it for you. I have a hundred and forty employees and I still have to jump into problems that I don’t think I don’t have to deal with. But you’ve got to realize one is going to care more about it than you. And especially early, you’re going to have to wear a lot of hats.

Doing a bunch of different stuff is fun. But then again, even as you grow you are going to be figuring out how to solve the next problem. Just look at McDonalds, another huge company, “Oh shit, everyone wants to eat healthy now, what are we going to do?” So, the bottom line is: Problems never really go away, they just change. If you’re the born and bred entrepreneur, like always want to hustle, always want to grow, world-beater kind of person, you’re always going to be breaking things, you’re always going to be doing things that cause other mistakes and ultimately, you’re going to solve those.